November 7, 2019
###### cashflows are unconventional
November 7, 2019

Question 1

Calculate the payback period for a project that requires investment of \$5,400 and will provide the cashflows of \$1,200, \$400, \$700, \$3,000 and \$500 in years 1 thru 5 respectively.

Question 2

A project has the following cash flow. What is the project’s NPV?

Discount rate:

11.00%

Year

0

1

2

3

4

Cash flows

−\$1,000

\$350

\$350

\$350

\$350

Question 3

IRR has the following drawbacks. Check all that apply. No credit if you miss or wrongly check any option.

o IRR may lead you to a wrong decision if you are deciding between mutually exclusive projects.

o For a project with conventional cashflows you may decide to take a project based on IRR

when NPV would have led you to reject the project.

o IRR assumes that intermediate cashflows from a project are invested at IRR

o There may be several IRRs if the cashflows are unconventional

o You may get a negative IRR

Question 4

A project has the following cashflow. Calculate NPV.

WACC:

o 9.00%

o

o

o

Year

o 0

o 1

o 2

o 3

Cash flows

o −\$1,000

o \$500

o \$500

o \$500

Question 5

Calculate the project’s IRR.

Year

0

1

2

3

4

Cash flows

−\$1,050

\$400

\$400

\$400

\$400

Question 6

A project has following cashflow. Calculate NPV

WACC:

10.25%

Year

0

1

2

3

4

5

Cash flows

−\$1,000

\$300

\$300

\$300

\$300

\$300

Question 7

Given the following cashflows calculate NPV.

WACC:

10.00%

Year

0

1

2

3

Cash flows

−\$1,050

\$450

\$460

\$470

Question 8

Given the following cashflows calculate payback period.

WACC:

10.00%

Year

0

1

2

3

Cash flows

−\$1,050

\$450

\$460

\$470

Question 9

Calculate the NPV of a project that requires investment of 937 and provides the cashflows of 104, 232, 294, 272 in the next 4 years. The relevant discount rate is 12%. (All numbers are in dollars)

Question 10

Find the payback period for a project that requires investment of \$48 and returns \$14 every years for 7 years. ### "Is this question part of your assignment? We Can Help!" 